The Impact of Geopolitical Risks on Financial Development: Evidence from Emerging Markets

Lu, Zhou; Gözgör, Giray; Huang, Mai; Lau, Chi Keung Marco

doi:10.7441/joc.2020.01.06

Cited by 58 publications

(14 citation statements)

References 22 publications

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“…(i) To the best our knowledge, this is the first analysis to investigate the relationship between geopolitical risk and climate change for 12 Latin American and Asian countries. (ii) Political instability, terrorism, and conflicts are mainly considered risk indicators in the extant literature (Lu et al, 2020). However, we use the geopolitical risk (GPR) index as an indicator of geopolitical risks that consists of comprehensive combinations.…”

Section: Global Warming Is Likely To Reach 15°c Between 2030 and 2052...mentioning

confidence: 99%

Is there any relationship between geopolitical risk and climate change?

Cengiz

Manga

2022

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Purpose: The aim of this study is to point out the impact of geopolitical risk on climate change. The CO2 emissions per capita is used as a proxy for climate change. Methodology: In this study, the data sample covers annual data from 1990 to 2015 for 12 selected Latin American and Asian countries. After standard preliminary tests (Cross-sectional dependence tests, CIPS unit root test, and slope homogeneity test), we employ the second-generation estimator – the AMG (Augmented Mean Group) method to explore the long-run relationship between geopolitical risk and CO2 emissions per capita. Results: The AMG findings document that a 1% rise in geopolitical risk escalates CO2 emissions per capita by 0.001%. In addition, economic growth and fossil energy consumption foster CO2 emissions per capita, whereas renewable energy contributes to decreasing CO2 emissions per capita. Conclusion: In recent years, scholars have attempted to explore the impact of geopolitical risk on environmental degradation. According to our results, in Latin American and Asian countries, decreasing geopolitical risk and conflict can impede environmental degradation. In the long run, a robust clean energy policy should be considered in case of geopolitical conflict by the government. Besides, the government should focus on renewable energy policy and substitute non-renewable energy resources with more technology-intensive resources.

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Section: Global Warming Is Likely To Reach 15°c Between 2030 and 2052...mentioning

confidence: 99%

Is there any relationship between geopolitical risk and climate change?

Cengiz

Manga

2022

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“…Furthermore, the level of geopolitical risks in a economy also influences the level of domestic credits. Lu et al. (2020) show that geopolitical factors such as military-related tensions, nuclear tensions, war threats, terrorist threats and war intentions all negatively affect the level of domestic.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of credit demand and credit constraints among households in Ghana

Asiamah¹,

Steel

Ackah

2021

Heliyon

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This paper investigates the determinants of and trends in credit demand and credit constraints of households with respect to both formal and informal financial institutions in Ghana. Trends and explanatory factors over 1992-2013 using pooled data from four Ghana Living Standards Surveys are analysed using the Heckman Probit model. Estimates for the full population reveal that tertiary education is a significant determinant of both credit requests (positively) and credit constraints (negatively). In the rural population, household heads that were widowed or separated and those that lived below the poverty line are more likely to request credit and also more likely to experience credit constraints. In the urban population, the aged are less likely to request credit but more likely to experience credit constraints. The policy implication is that financial inclusion measures targeted to people living below the poverty line, the widowed and separated in rural communities are needed to respond to their relatively high demand for credit services and overcome their exclusion from access to credit that could help in generating income to reduce poverty. The sex of a household head is significant for binding credit constraints in the full population and the urban sample, but not significant in the rural sample. Surprisingly, the study finds a decline in the proportion of households requesting credit in the full population as well as rural and urban areas, indicating increasing self-exclusion.

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“…These high savings rates have prompted significant domestic investment and contributed to considerable capital outflows. Acquiring capital and financial investments from savings may be a driving force in a nation's development and success (Siddik et al 2018;Tessema, 2020;Lu et al, 2020). Banks play a significant role in facilitating the free movement of investment from regions of economic excess to deficit.…”

Section: The Relationship Between Domestic Saving Domestic Credit And...mentioning

confidence: 99%

Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth

Triantoro

Akhtar

Khan

et al. 2023

IJEEP

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Oil price fluctuations have always been controversial and remain significant in how a country's economy develops. It is especially easy for the worldwide price of natural resources to fluctuate, putting developing nations at risk of economic instability. Consider Pakistan's economy, which is very sensitive to changes in oil prices due to its reliance on the commodity. This research analyses the effects of oil prices on several macroeconomic indicators, including inflation, imports, gross savings, domestic lending to the private sector (DCPS), and industrial value-added in Pakistan. The study uses an error-correcting framework known as autoregressive distributed lag (ARDL) modelling to examine long-term connections between variables and their short-term implications. Additionally, data acquired between 1970 and 2020 was analyzed using Granger causality tests, impulse response functions (IRFs), and variance decomposition analyses (VDAs). The study found that inflation and domestic loans to the private sector hampered economic development in the near run. Conversely, imports, gross savings, industrial value added, and oil rents have a positive effect. A long-term connection between these variables was verified using the boundaries test. A unidirectional link was found in the causality tests between economic growth and imports, inflation and economic growth, and gross saving and domestic credit. An inverse link between domestic credit and inflation was found. The effect of oil rents on economic development in Pakistan is expected to rise during the next four years, according to the forecasts, before levelling out. According to the VDA results, the most critical factor influencing Pakistan's economic development over the next decade would be domestic lending to the private sector. Following these empirical results, the study proposes policy adjustments that might help Pakistan's economy expand more quickly and sustainably.

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The Impact of Geopolitical Risks on Financial Development: Evidence from Emerging Markets

Cited by 58 publications

References 22 publications

Is there any relationship between geopolitical risk and climate change?

Is there any relationship between geopolitical risk and climate change?

Determinants of credit demand and credit constraints among households in Ghana

Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth

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